With elections looming, Iran is on the 'verge of bankruptcy'

Published June 13th, 2013 - 06:13 GMT

Iran’s financial institutions are on the “verge of bankruptcy” and the country could lose “control over the banking system,” the country’ s Supreme National Security Council has warned in a memo obtained and distributed by an Iranian opposition movement on Wednesday.

Iran’s financial institutions[1] are on the “verge of bankruptcy” and the country could lose “control over the banking system,” the country’ s Supreme National Security Council has warned in a memo obtained and distributed by an Iranian opposition movement on Wednesday.

Amir Hossein Jahanchahi, head of the opposition “Green Wave” movement, said the memo, marked as “secret” and dates back to April 10, 2013, was leaked to members of his organization.

The memo, whose authenticity could not be verified by Al Arabiya, said the collapse of the banking system will lead to a “steep rise in unemployment and inflation.”

The letter, addressed to the Central Bank of Iran (CBI), provided a bullet-point description of the economic crisis. It said: “The banks are on the verge of bankruptcy, and are only managing to function thanks to intensive assistance from the CBI.”

“The CBI's lack of budgetary resources is expected to undermine its ability to support the banks,” it warned.

“Lack of access to foreign currency held abroad, will inflict serious blows to import capabilities and the widening sanctions in the current year will exacerbate existing pressures on the local economy,” the council added.

It called for “significant restrictions on the public's withdrawal of deposits from banks” and a 20 percent tax on public deposits in banks “in line with the Cypriot model.”

It also urged “additional restrictions on taking foreign currency out of the country.”

The council also issued “operational measures to combat the country's economic crisis.”

These measures include the deployment of security forces around banks, money-changing agencies, and ATM's and the “drafting of an emergency plan to combat any potential storming of the banks by the public.”